South Korea lived up to its reputation in 2006 as one of the most dynamic countries in the world, but it faced a growing degree of political, economic, and diplomatic uncertainty, given North Korea’s nuclear test in October (see Korea, Democratic People’s Republic of, above), presidential elections slated for December 2007, and growing anxieties about the economy.

All eyes were on the candidates for the upcoming presidential election. Given an approval rating in the single digits (and falling) and his political party in revolt, Pres. Roh Moo Hyun might have been a lame duck, but he offered a series of unvarnished criticisms of institutions (such as the Korean military) and individuals around him, including presidential hopefuls from his own party. The leading presidential candidate was former Seoul mayor Lee Myung Bak. His closest competitor was Park Kun Hye, the daughter of former president Park Chung Hee. Park bounced back quickly from a knife attack in May at a campaign rally for local elections, which her party swept, but questions lingered about her overall leadership abilities. Another former Seoul mayor, Goh Kun, was running third in most polls, but he was lacking in charisma and was without a political party to support his campaign. Though a conservative, he was seen by many liberals as their only hope for clinging to power, given that the leading liberal candidates were collectively less popular than President Roh.

Despite solid economic growth of 5% and an unemployment rate of 4%, an economic malaise settled over South Korea, led by fears of an overheated housing market (prices in some areas of Seoul rose by 20%) and frustrations with an education system that led a growing number of the more affluent to educate their children abroad. Nevertheless, South Koreans’ overall pessimism was difficult to fathom, especially since exports broke the $300 billion mark in 2006, which represented a doubling of exports in five years and placed South Korea 11th in the world among exporting countries.

On the diplomatic front, all of South Korea’s key bilateral relationships deteriorated. North-South relations almost collapsed after North Korea’s missile launch in July. Relations with the U.S. continued the plunge that had begun in 2001 when Pres. George W. Bush took office. The chief sources of friction were divergent policies toward North Korea and differences over the future role that the U.S. would play in defending South Korea. Relations were already bad with Japan, but a territorial dispute over two rocks (Tokdo/Takeshima) in the sea between them nearly turned into a military clash in the spring. President Roh met with his Japanese counterpart on October 9, the day the North conducted its military test, but this did not stop Roh from raising the history issue. After their summit the two leaders held separate press conferences on opposite ends of Seoul. Relations with China also deteriorated, with disputes over history (whether an early kingdom was Korean or Chinese) and a reef that could be seen only at low tide.

These diplomatic setbacks made the selection of Foreign Minister Ban Ki-moon as the new UN secretary-general all the more surprising. South Korea also saw its first female prime minister assume office in April. Though the post was largely ceremonial, this appointment represented a significant step for a traditionally male-dominant society. A report by the World Economic Forum showed, however, that in terms of gender equality, South Korea placed 92nd of 110 countries; it occupied the last position in sex ratio at birth, came in 99th in the ratio of female parliamentarians, and took the 95th spot in wage equality.

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